Acta Universitatis Danubius. Œconomica, Vol 11, No 2 (2015)

A New Approach to Utility Function

Catalin Angelo Ioan

Abstract

This paper treats from an axiomatic point of view the notions of indifference andpreference, relative to the consumption of goods. After the introduction and analysis of indifferenceclasses, the notion of the utility function is introduced naturally, a number of axioms givingconsistency and rigor. The concept of marginal utility is presented in both differentiable and,especially, in the discretized case. There are introduced new types of discretized marginal utility thatadapts better when analyzing discrete the differential situation. The marginal rate of substitution isaddressed globally, for n goods, obtaining the notions of hyperplane or minimal vector of substitution.Also, in the discretized case, there are introduced the marginal rates of substitution to the left, right orbilateral, as well as the adjusted rates, which give more precisely the possibility of consumption of agood when replaced another.

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